The Facts of Business Life: What Every Successful Business Owner Knows that You Don�t

By Bill McBean

IF YOU BELIEVE THAT:

• Being your own boss can be a great career choice
• Success is what you decide it is
• Doing what you have a passion and talent for can be very profitable
• Monetary risk, hard work, and new ideas should be financially rewarded
• Understanding the business basics every successful owner focuses on—and in what order—would be beneficial
• Success works for you only after you’ve worked for it
• Marketplace battles are won before they are played
• Knowing what owning a business is really like would make ownership success a lot easier
• Change can create great opportunities
• Knowing when to exit a business is as important a life and business decision as becoming an entrepreneur in the first place

THEN THE FACTS OF BUSINESS LIFE IS FOR YOU!

Written by a successful business owner with four decades of experience, The Facts of Business Life is full of real-world concepts that owners must use and embrace if they want to become and stay successful. This multiple award-winning book has been endorsed by some of America’s top business leaders, like Steve Forbes and Ken Fisher, and has been recognized as “one of the best five business books of the year” and “a must read for entrepreneurs or those wanting to be one.”

McBean begins with clear explanations and real-life examples of the seven Facts of Business Life that every successful business owner knows and executes consistently, including exactly what they are as well as how and when to use them. He then goes on to show how those facts impact on the five levels every successful business passes through, from “Ownership and Opportunity” to “Moving On When It’s Time to Go,” explaining that while the facts themselves remain the same, as a business becomes successful and moves through its life cycle, the way they are applied must change to fit changing circumstances.

But there are even more reasons why this breakthrough business book is a must read, including:

• Its principles are based on the author’s own experience in starting and running successful businesses in a variety of industries.
• It shows that the most successful businesspeople create profitable opportunities rather than wait for them to present themselves.  
• It enables readers to analyze the likelihood of their own success based on the characteristics most successful owners have.
• It reveals the #1 priority for all owners and their employees, and why every owner needs to continually focus on it (Hint: it’s not being profitable).
• It emphasizes that becoming successful is no guarantee that success will last, and that success itself can be a trap that eventually leads to failure.
• It shows that a business’s culture isn’t just a mission statement but also the processes created to operate the business and the employees who implement them.
• It discusses the steps that must be taken even before a business is started to increase the odds of its becoming a lasting success.
• It covers every step in a business’ life cycle, including the last one, showing that the best time to exit a business is when you don’t have to, and that unless you pick that time, someone else will.

MANY BUSINESS BOOKS INCREASE THEIR READERS’ KNOWLEDGE—THE FACTS OF BUSINESS LIFE NOT ONLY INCREASES THAT KNOWLEDGE, IT SHOWS YOU HOW TO TURN IT INTO PROFITS. 

• Language: English
• Publisher: Wiley
• Release date: Sep 19, 2012
• ISBN: 9781118236994

Book preview

Introduction

Business ownership is a seductive magnet. It promises success, wealth, and a life full of rewards for you and your family. The fact is, though, that the reality is very different from the dream, even when you are successful. That’s because most would-be owners don’t have a very clear picture of what it actually takes to be successful. The Facts of Business Life is designed to remedy that. It is accordingly a unique business book that focuses on what needs to be done to create success, how to do it, and when to do it. And I know these business concepts will work for you because they’ve done so not only for me but for hundreds—if not thousands—of other successful business owners.

One of the reasons it’s unique is that it provides a series of seven facts without which no entrepreneur’s business can succeed. These facts are:

1. If you don’t lead, no one will follow.

2. If you don’t control it, you don’t own it.

3. Protecting your company’s assets should be your first priority.

4. Planning is about preparing for the future, not predicting it.

5. If you don’t market your business, you won’t have one.

6. The marketplace is a war zone.

7. You don’t just have to know the business you’re in, you have to know business.

As you can see, some of these facts cover traditional areas like leadership and control or management, while others are less conventional, like those concerning the war zone and the importance of protecting business assets. As the book explains, each of these facts is important, but as important as each one is, their real strength lies in how they are interrelated and how they work together. That is, in addition to their individual value as guidelines for entrepreneurs, they demonstrate that being a successful owner isn’t about being good in one or two business disciplines but in all seven of them, as well as about understanding how they depend on each other.

You may understandably ask why I’ve chosen these seven facts out of the many disciplines of business. When you own a business, and I have owned several successful ones, you learn that you must be able to prioritize, and these seven facts, or concepts, represent the priorities I believe every owner, new or experienced, should never lose sight of. In addition, these particular concepts benefit both would-be and experienced owners in several different ways: (1) they are easy to implement; (2) they are easy for employees to understand and work with; (3) the more you understand them, the better chance you have for success; (4) they work in unison and form a solid foundation on which to build a business; and (5) they will produce the desired results.

The other important point to bear in mind regarding the seven facts is that they are organized strategically. That is, the first fact concerns leadership because without leadership and vision you cannot define success. In other words, it’s leadership that determines the company’s eventual destination and what it will look like when it gets there. Leadership is always followed by control, or management, which essentially outlines the day-to-day blocking and tackling that must be accomplished in order to achieve success as you have defined it. The third fact concerns protecting assets, because if your assets aren’t protected, you are essentially leaving your investment at the mercy of your employees and forces in the marketplace over which you have little or no control. After protecting assets comes planning, because planning creates the road map, based on objectives and goals, that determines how your business will attain success, as well as maintain it. The fifth fact covers marketing, because very little can happen without customers and the sales revenue they provide, and marketing and advertising focus on attracting customers and creating a market presence. The fact that the market is a war zone comes next because, while it’s one thing to attract customers, it’s another to sell them and keep them as customers, and it’s important that you understand this distinction. And, finally, the seventh and last fact—the importance of having a good general understanding of business—makes it clear that implementing all the previous facts can be done most effectively only when they are used together and backed up by a broad understanding of all the various facets of business.

The other reason The Facts of Business Life is unique is that it introduces the concept of a business life cycle, and the five levels every successful business goes through as it starts, grows, and matures. These five levels are divided into two groups. The first, which represents planning levels, includes Ownership and Opportunity and Creating Your Company’s DNA. The second, which represents the action levels, includes From Survival to Success, Maintaining Success, and, finally, Moving On When It’s Time to Go. Understanding this life cycle enables owners to pinpoint where they are at any given time, what has been done, and what has yet to be accomplished. The levels are progressive in nature, and owners carry their experiences with them from one level to the next.

It is important to note, however, that these levels are not quite as linear as they appear to be. As planning levels, Levels 1 and 2 are about deciding if you want to own your own business and, if so, what kind of business you want; and, having decided to become an owner, creating the processes and procedures under which your company will operate. Level 3, the first of the action levels, is where you implement the plans you made at the earlier levels and actually begin operating the business. Level 4 occurs when, having achieved success, you look for ways to maintain that success, and Level 5 is when you begin thinking about selling the business, passing it along to a successor, or closing it down. However, nothing is ever that straightforward in business. For example, it is possible for a successful business at Level 3 to slip back along the survival–success spectrum, in which case the owner has to return to Levels 1 and 2 to remedy the situation. In fact, it’s necessary at all the action levels for owners to occasionally revisit the first two levels in order to review opportunities and evaluate threats, keep up with changes in the market, and make changes in their own processes.

Finally, the book explains how the application of the Facts of Business Life changes over the five levels. For example, leadership is always a business constant, but how an owner leads a business is significantly different when he or she is just starting to become successful than when the business has had years of back-to-back success. Similarly, the way an owner attacks the war zone is totally different when the business is working to maintain success than it is when the company is relatively new. This is, of course, common sense, but no business book has ever identified or addressed these issues as this one does.

There are few guarantees in life, especially if you’re a business owner. Markets change, government regulations make it harder to do business, customers want more for less, competitors force you to adapt and innovate, and on and on. With all the changes that engulf owners in today’s business climate, it’s more important than ever to build a stable platform of business concepts on which they can operate their businesses. The Facts of Business Life provides that platform.

—Bill McBean

Corpus Christi,

Texas April 17, 2012

Chapter 1

The Facts of Business Life

Just as there are facts of life that affect us on a personal level, there are facts of life that affect us as businesspeople, and business owners who ignore them are essentially setting their businesses up for failure rather than success. These Facts of Business Life apply to every aspect of owning and managing a successful business—from maintaining control to strategic planning, from protecting assets to marketing, and from leadership to establishing and managing appropriate policies and procedures. And when these facts are recognized, understood, and acted on appropriately, they can literally make the difference between success and failure.

The sad truth is that less than 30 percent of businesses last more than 10 years, and most failures occur in the first few years of operation. Some of those businesses are doomed from the start because they are ill-conceived, poorly planned, or lack the working capital to attain success. Still others fail because their owners sabotage their chances to succeed through arrogance, lack of ethics, or misunderstanding what the role of an owner actually is. There are, though, other businesses—which I believe to be the majority—that could be successful but aren’t, simply because their owners don’t understood these Facts of Business Life.

And what are these facts? They represent the seven business concepts that every entrepreneur or business owner who hopes to succeed must have in his or her toolbox, including exhibiting leadership, maintaining control, protecting the company’s assets, planning, marketing effectively, having a warrior mentality, and understanding business. There are, of course, other important business concepts, but after many years of running a number of successful businesses and studying successful businesses managed by others, I have come to the conclusion that these are the seven essential concepts without which no entrepreneur can succeed or reach his or her potential.

But it’s not enough for you, as a business owner, to just understand these seven facts. It is equally important that you recognize how these facts are interrelated. Very few things in life work in isolation, and that’s true of managing a business as well. If, for example, you are very adept at planning or marketing, that’s a good start. But being able to develop strategic plans or market your product or service well will mean little if you don’t have a good understanding of business in general. Similarly, while possessing leadership skills or knowing how to maintain control in an organization will be of enormous help in enabling you to manage your company, unless you’re equally good at protecting the company’s assets and have a warrior mentality, it’s unlikely that you will ultimately be successful. In other words, you have to be good at all these things if you want to make sure your company will still be here 10, 20, or even 30 years from now.

Finally, although understanding the facts and recognizing their interrelationship are essential, there is one other concept you must understand if you hope to attain success. And that’s the concept of the business life cycle—that is, there are various levels through which every successful business must progress over the course of its lifetime. Businesses, like people, go through various stages of life, and it’s important to understand both what these stages are and how they affect the implementation of the Facts of Business Life. In this chapter, I provide an overview of the seven facts, and in the next I discuss what the business life cycle is and how it impacts making use of the facts.

The Facts

As I’ve already mentioned, there are many things an owner needs to know if he or she wants to start, build, maintain, and eventually sell a successful business. And because there are so many, no book—or, for that matter, series of books—could possibly teach you all of them at once. As with the facts of everyday life, some of them have to be learned at the beginning, and some can be learned as you go along. The following seven facts are the ones you need to understand right from the start if you want to build a strong foundation for your business.

Fact 1: If You Don’t Lead, No One Will Follow

Good business leadership begins with defining both the direction and the destination of your company. But it doesn’t stop there. It also requires you to quickly develop a set of skills and to continuously improve on them as your company moves forward. These skills include being calm under pressure, disciplined, motivational, realistic, and able to effectively communicate your vision of success, among others. In other words, as with all the other Facts of Business Life, leadership is something that must be recognized, understood, and acted on every day.

One aspect of leadership is developing a culture in a company that’s based on expectations, and rewarding those who meet or exceed these expectations. A good leader makes sure that such employees are not only recognized but also financially rewarded, as this kind of positive reinforcement helps focus the entire company on the things that really matter. Another is developing a culture that enables employees to deal constructively with the kind of problems that inevitably come up in any business. For example, imagine a patron in a restaurant who complains to the waiter that he is not satisfied with his meal. If the owner has developed an appropriate culture, the waiter will apologize without hesitation and do whatever is necessary to satisfy the disgruntled customer. As a result, the customer is not only satisfied, but because he was treated so well he is considerably more likely to come back. The owner who has developed this kind of culture has made it possible to turn a negative situation into a positive one, in the process strengthening the entire company.

Some people argue that leaders are born, not made, and there is probably at least a bit of truth in this. However, there are a great many aspects of leadership that can be learned, and if you are intent on making your business a success, it is imperative that you develop them.

Fact 2: If You Don’t Control It, You Don’t Own It

If you don’t control your business by defining the key tasks that must be handled every day, and dictating how those tasks will be handled, you don’t control anything, you don’t own anything, and you probably won’t be in business for long. The concept of ownership control is this simple. This kind of control, however, can be achieved only through teamwork, which occurs in successful companies when people (employees), products (or services), and processes (internal procedures) work in unison. Essentially, people deliver the products by following the company’s internal procedures, and it’s these processes that operate the business.

A good example of why this is so important is what happens when an owner fails to establish procedures at the point of delivery. If there are no specific procedures, every employee handles customer delivery based on his or her own standards, which means every customer is handled differently. This presents a problem not only because it’s never good for customers to be handled inconsistently, but also because the customer delivery point triggers a series of important internal events, including customer follow-up, inventory control and reorder, financial accounting, and others. And if these aren’t triggered in a consistent and correct way, not only will the company not have the inventory its customers want, the company itself won’t have the critical data it needs to make sound decisions.

But even if you do tell employees how you want the business to operate, it will never happen unless proper controls are designed and implemented to make sure employees do what’s required. Without controls like these, there is a good chance that serious problems will develop, and you may not recognize them until they’ve become crises. Unfortunately, when owners are faced with crises, they have to act on them immediately, but at this point they have relatively few options available to them. Similarly, if you don’t establish and maintain a professional dress code, your employees are more than likely to use their clothing to express their individualism. Of course, doing so is perfectly acceptable outside of business hours, but business isn’t about individualism, it’s about conformity and a common goal, and it has to be controlled. The fact is that even though you may have your name on the business, if you don’t control how the business operates, all you’re really doing is observing a business you’ve invested in. And that’s no way to run a company.

Fact 3: Protecting Your Company’s Assets Should Be Your First Priority

Many people are likely to be surprised by this Fact of Business Life, because they think that a company’s first priority should be sales, profits, and growth. But while sales, profits, and growth are important, it is equally if not more important to focus on protecting your assets because they power your sales, profits, and growth. Assets include equipment, accounts receivables, cash, and all the other items on your business’s balance sheet. But there are other assets on which you can’t put a dollar value, like your skills and experience; your employees and their skills and experience; the company’s processes, customer base, and reputation; and others. And even though these assets do not appear on any balance sheet, they all have value and should accordingly be treated as if they had a cash value. And this means you must do whatever has to be done to manage and protect them.

For example, in order to build and maintain a company’s customer base, you have to focus on developing processes for keeping existing customers as well as training employees to find new ones. If, however, you concentrate on finding new customers at the expense of providing after-sales service to existing ones, it’s likely that those existing customers will go elsewhere. Protecting and managing a company’s assets is one of the most underappreciated business issues today and, if mismanaged, can be one of the most damaging ones. But if you understand what all of a company’s assets are, and that they all have to be protected, you are much more likely to see your company not only survive but succeed.

Fact 4: Planning Is About Preparing for the Future, Not Predicting It

Nobody knows what the future will bring, but you can make educated guesses based on the most current, accurate information available as well as your own past experiences. That means gathering and making use of such information as past sales, expenses, and profit results; the size of the market; and competition and customer demographics, just to name a few. Doing so enables you to look into the future and start anticipating what opportunities or threats may present themselves, as well as to make sure that you have whatever is needed to prepare for them. Although people frequently think planning is limited largely to the early stages of a business, it’s actually an ongoing activity, or at least it should be.

It’s important to remember, too, that planning is both a science and an art. The science is in gathering pertinent information, and the art is in taking that information and turning it into a plan that will move the business from here to there over a specific time period. In fact, being able to plan better than one’s competitors is such an important skill that it can provide a company with a competitive advantage in the marketplace. If, for example, an owner knows there is a new product coming on the market and proactively plans for it ahead of time, he or she can own the market before the company’s less aggressive competitors are even thinking about it. This is similar to something the Ford Motor Company did in 2008 and 2009 when careful planning enabled it to see the coming restriction on bank lending. Being proactive, they were able to raise capital before the tightening of lending regulations, which their competitors, General Motors and Chrysler, did not. And because Ford’s management read the tea leaves, unlike GM and Chrysler, their company didn’t run out of cash and need a government bailout. They knew, as you should, that planning is important because it focuses owners on what’s important and prepares them for what lies ahead.

Fact 5: If You Don’t Market Your Business, You Won’t Have One

Marketing and advertising are business realities. Without marketing and advertising there are few sales, and without sales there is no company. If you can’t or don’t want to work to market whatever product or service the company is going to provide, you should seriously reconsider the decision to become an owner. It doesn’t matter if your company has the best product available or is the best at whatever it does. If not enough people know about it, it won’t make any difference. The need to make potential customers aware of your company—to get the company’s message out into the marketplace—never goes away, and only companies that are relentless in doing so remain successful.

For example, an owner of a new company has the huge challenge of letting the marketplace know that a new business is open. At times like this, money is usually very tight and large expenditures, such as marketing, tend to make owners extremely nervous. But the fact is that if marketing isn’t done, very little good will happen. And if you understand this, and will make the necessary effort, you will have a big advantage over those who are afraid to spend their money or who view marketing as an expense rather than the investment it is.

Another example of the importance of marketing is the situation in which a company has been offered an opportunity to buy some merchandise at a significantly discounted price, but only if they will order twice as many of the items as they normally would. All things being equal, under normal operating conditions the company would likely be unable to take advantage of an opportunity like this. But if they were to develop a marketing and advertising campaign to sell the item and pass on the discount to the customers, they would be able to attract new customers, increase their market share, and in the process create additional profits. In other words, marketing and advertising are weapons that businesses can’t afford to not take advantage of because of the potential they have to drive sales and profits.

Fact 6: The Marketplace Is a War Zone

Every company has competitors, and if it doesn’t and it’s successful, it soon will. Successful owners know they have to fight not only to win market share but to retain it as well. In fact, the reason they’ve become successful is that they’ve developed a warrior mentality, and it’s this mentality that enabled them to survive and succeed in the first place. Successful owners also know that past success is no guarantee of future success, and that the only way to remain successful is to maintain their fighting mentality.

If, for example, a new competitor arrives in the market either by buying one of your competitors or starting a new business, the marketplace is likely to change. In a situation like this, you may well have to be more aggressive if you want to protect what you have, that is, retain your market share, much less increase it. But the market will also change if a competitor closes down his or her business. In that kind of situation, a void is created in the market, and it will be only the more aggressive owners who step in to fill that void, take advantage of the opportunity, gain market share and new customers, and at the same time increase sales and profits.

In other words, as an owner, in order to be successful or remain that way, you have to continually focus on the market, react to it, and fight for what you believe should be yours. The marketplace is a war zone, and if you don’t think of it that way, your competitors will, and they will be the ones who win the war.

Fact 7: You Don’t Just Have to Know the Business You’re in, You Have to Know Business

Understanding one’s industry is obviously a must, but in order to become successful in any business an owner must also understand how business itself works. That means he or she has to not only understand the Facts of Business Life but must also be familiar with the various aspects of business, such as accounting, finance, business law, and personnel issues, to name just a few. In addition, an owner must understand how the facts, and the various aspects of business, impact on each other so that he or she can make intelligent decisions.

A good example of the importance of this might be when an owner, seeing a market opportunity, buys a competitor by using a significant amount of working capital from his or her existing business. As a result, both companies are strapped for cash and limited in their potential for growth or expansion, if not in even more dire circumstances. If this owner, however, had a better understanding of accounting and finance and had completed a working capital analysis, as well as doing cash flow calculations, he or she could have foreseen the cash squeeze problem and avoided it by finding other means of funding the purchase.

If any proof is needed of the importance of having a good understanding of business, all you have to do is look at what often happens when the owner of a business decides to retire and turn it over to one of his or her children. More often than not, when this happens, the son or daughter who takes over has spent a few years working in the business and a few more helping the owner run it. But a lot of family businesses don’t do as well when they are passed on, and one of the primary reasons for this is that, even though the new owner has some experience in the business, he or she often doesn’t understand the various facets of business and how they are all interrelated. And the result, unfortunately, is that a perfectly viable company, one that its original owner spent years building up, now has a questionable future.

Colleges and universities understand the importance of having an overall understanding of the many concepts of business—it’s why they insist business students choose a major but also take other core business courses. The fact is that if you don’t have a good general idea of how business works, it puts you and your company at a distinct disadvantage when compared to competitors who have developed this understanding.

The Business Life Cycle

In business, as in life in general, nothing remains the same. There are so many variables beyond our control that, when it comes to ourselves as well as to our businesses, the only way we can be sure to not only survive but flourish is to adapt to the changes that are taking place around us. There is, however, one aspect of both business and life in general that we can expect and, to some extent, prepare for—and that’s maturing. Of course, people don’t mature in exactly the same way that companies do, but both people and organizations go through a life cycle. In life, we start as newborns, then grow into infants, toddlers, children, teenagers, young adults, adults, middle-agers, and, eventually, seniors. Companies, by comparison, go through five stages—or levels—of life:

1. Ownership and Opportunity

2. Creating Your Company’s DNA

3. From Survival to Success

4. Maintaining Success

5. Moving on When It’s Time to Go

I will provide more explanation about these five levels in the next chapter. For the moment, though, it’s important to recognize that, just like people, businesses need guidance as they go through their life cycle, and it’s the owners who are ultimately responsible for providing that guidance. It’s equally important to recognize that, just as the guidance a parent provides a child must change as the child grows older, the guidance an owner provides over the lifetime of a company must change as the company moves up from one level to the next.

The seven Facts of Business Life are essentially a means of providing guidance for a company. What that means, though, is that while the facts are always true, their application will change depending on where the business is in its life cycle. We have all seen businesses that come out of the gate hard and fast, have a big impact in the market, and then fizzle out, never reaching their potential. What that means is the owner provided appropriate guidance to enable the company to get off to a good start, but wasn’t able to adapt that guidance to the successive levels of business. Making that transition successfully, ensuring that your company will continue to be successful, requires an understanding of how these seven concepts change as the business matures, and your ability to adjust to those changes.

Chapter 2

The Five Levels of Business Success

Walt Disney’s hit movie and Broadway show The Lion King features a wonderful song called The Circle of Life, which reminds us that we are all born, grow up, get older, and eventually pass away. But it isn’t only living things that go through a life cycle—businesses do the same. Just like human beings, new businesses start, grow, achieve success, maintain that success, and eventually come to an end. This business life cycle is not always apparent, but it does exist, and it’s going on around us every day and everywhere. And it’s very important for business owners to understand this life cycle, because it gives them parameters or structure, which in turn forces them to focus not only on what is important but also on when it’s important.

Trying to manage a successful business without taking this concept into account is like playing a baseball game without knowing what inning you are in, if you are winning or losing, where you rank in relationship to other teams, or how far into the season you are. But if you understand the business life cycle, you are able to look at your company and determine where you are, how far you have to go, and what you have to do to get there. Having this understanding also helps you define what success means to you, determine appropriate objectives and goals, plan and strategize to achieve those goals, measure your efforts, and make adjustments and improvements as necessary. Finally, it makes it possible for you to see threats as well as opportunities, recognize options for overcoming the threats, and take advantage of the opportunities you might have otherwise missed. Unfortunately, though, the vast majority of business owners operate without this understanding. And there is no doubt, at least in my mind, that this lack of understanding contributes significantly to the extremely high failure rate of American businesses.

The fact is that, whether you are aware of it or not, every successful business inevitably passes through five levels over the course of its lifetime:

1. Ownership and Opportunity

2. Creating Your Company’s DNA

3. From Survival to Success

4. Maintaining Success

5. Moving on When It’s Time to Go

The first level, Ownership and Opportunity, is the one in which individuals seek out or create an opportunity in a market because they believe their ownership skills can produce a reasonable profit based on their investment. At Level 2, Creating Your Company’s DNA, owners create processes and procedures that determine how the company will be run on a day-to-day, month-to-month basis, which in turn dictate how employees will perform their jobs and how they will interact with each other and the company’s customers in order to create the expected outcome. These first two are essentially planning levels, although owners also have to refer back to them as their companies go through the business life cycle.

The third level, From Survival to Success, is the period during which those day-to-day processes are put into effect, results are measured to make sure that what’s accomplished is what was expected, and steps are taken to modify them if necessary. During Level 4, Maintaining Success, owners protect their businesses from threats and create or seek out additional opportunities in order to solidify the company’s foundation and build on its success. Finally, at Level 5, owners finalize and implement their plans for winding down their careers, and if they’ve done it right, exit the business on their own terms and with maximum payout. Levels 3, 4, and 5, then, are action levels in that at these levels the company is actually in operation.

These five steps in the business life cycle, the five levels of business success, are successive in nature. That is, a business must successfully complete Level 1 before it can go on to Level 2, Level 2 before going on to Level 3, and so on. In this respect it’s very much like going through school. You can’t go to middle school without first having gone to elementary school, attend high school without having finished middle school, or enroll in college without having completed high school. In addition, in the same way that the information you gather and the skills you develop in the lower grades continue to be used in the higher ones, everything you learn at the various levels of the business life cycle continues to be used as you move through it. That is, rather than leaving the levels behind, you actually bring them with you, and expand and improve as you go from one level to the next.

It’s important to remember, too, that even though you use the same skills in school from one grade to the next, you don’t necessarily use them in the same way. For example, you learn how to read in elementary school, but as you go through middle school, high school, and college, you use that skill to read different kinds of things. Similarly, you start to learn arithmetic in first grade, but by the time you’re finished with your schooling, you’ve learned how to solve much more advanced mathematical problems. The seven Facts of Business Life work exactly the same way. That is, although the facts—the skills you develop—remain the same from one level to the next, the way you apply and implement them changes as your business moves through the life cycle. Take, for example, Fact 4, Planning Is About Preparing for the Future, Not Predicting It. At Level 1, Ownership and Opportunity, most of the plans you make will be concerned with the overall profitability of the opportunity, how long it will take to become profitable, and how much cash you’ll need to get the business up and running. However, at Level 4, Maintaining Success, the plans you make are much more likely to be strategic and tactical in nature, and focused on market share and profit. In other words, the skill remains the same, but its use changes. And that’s why the level a business is on at any given moment—that is, where it is in its life cycle—has a significant impact on how it operates and what its owner’s role is.

There is also, however, an important distinction that needs to be made among the various levels. In his book, The Seven Habits of Highly Successful People (Free Press, 1990), Steven Covey discusses how everything is essentially created twice—first as a mental concept and then as a physical concept. This is true of the business life cycle as well. Levels 1 and 2 represent the mental creation of the business—that is, thinking and preparing—while Levels 3, 4, and 5 represent the physical creation of the business—that is, taking action to implement those thoughts and preparations. The truth of this will become clearer as you learn more about the Facts of Business Life and how they are implemented at the five different levels.

While in a perfect world every owner would begin at Level 1 and move easily on to Level 2, Level 3, and so on, life in the business world is seldom perfect. While most businesses do basically move from one level to the next, there are always instances in which, for one reason or another, they have to temporarily return to earlier levels. For example, if a company at Level 3, From Survival to Success, finds that one of its competitors has developed a better way to deliver its product to customers, it would be in the company’s best interests to go back to Level 2, Creating Your Company’s DNA, and reconfigure its own process for delivering its product, thereby keeping up with a competitor’s challenge. Similarly, if a company at Level 4, Maintaining Success, decides to expand its business, it has to go back to Level 1 to analyze whether the proposed expansion will be profitable, and, if so, return to Level 2, Creating Your Company’s DNA, to rework its processes to handle the

Reviews for The Facts of Business Life

[terrell_sanzone · Rating: 4 out of 5 stars]

I won this book as part of a Goodreads giveaway in exchange for an honest review.

I found this book to be very helpful in answering a few questions I had. There were also quite a few things I was not aware of and can now incorporate into my re-starting my own business. This book was fairly easy to follow even with my ADHD lol I recommend this book to anyone who has an interest in business.